The Council of Mortgage Lenders has reported a surprise rise in mortgage approvals in August, up 7% from July and up 15% on 12 months ago...

The Council of Mortgage Lenders (CML) has reported a surprise ‘summer bounce’ in mortgage lending with a 7% increase in August from July, suggesting the impact of the Brexit vote on confidence in the property market has not been as severe as many experts predicted.

The CML said gross mortgage lending reached £22.5bn in August, up from £21.1bn on a monthly basis and up by 15% annually, from the £19.5bn lent in August 2015 and the highest figure since 2007 when gross lending was £33.6bn.

The CML said the data reflected recent economic indicators on jobs, construction, manufacturing and services, which were all positive, showing a bounce back in August.

CML senior economist Mohammad Jamei said: “Widely voiced fears in recent months about the housing market have proved to be wide of the mark. Prospects for house purchase activity post-referendum look slightly subdued, when compared to late 2015 and early 2016.

“However, sentiment in the market recovered in August. This is reflected in stronger-than-expected transaction figures, and in our gross lending estimate.”

The CML said prospects for house purchase activity look slightly subdued but there could be growth in remortgage activity.

It pointed to the Bank of England’s cut in the base interest rate to 0.25% and its suggestion that it may cut interest rates further later in the year as a reason for a rise in remortgage activity.

Responding to the CML figures, Henry Woodcock, principal mortgage consultant at IRESS, said: “The holiday month of August typically has a seasonal downturn in lending compared to July. In 2015 August was 8% lower than July. So it’s surprising to see lending grow in August with gross mortgage lending up 7% on July and 15% from August 2015.

However, the CML sounded a note of caution, citing the lack of available properties for sale, which, it said, is close to the lowest it has ever been, which could reduce the number of transactions if buyers struggle to find properties they want to buy.

The CML said house purchase approvals fell to an 18-month low of 61,000 in July, though the CML said: “We expect there to be an uptick over the coming months, as buyers feel more confident.”

The CML added that stamp duty changes created a distortion in the first two quarters of the year and that “transactions in July and August should begin to show a more accurate, less distorted reading of the market.”

On the direction of house prices, Howard Archer, Chief UK & European Economist at forecasters HIS Global said: “The CML gross mortgage data dilute belief that house prices may dip over the latter months of 2016. We believe that a slight dip in house prices is likely in 2017, possibly by around 3%.”